Microfilm Capital Tang Xiaoming: Sports, ground entertainment, and new media will rise strongly

What the public sees is the two years when Microfilm Capital has been speeding on the capital track and invincible. But for Tang Xiaoming, chairman of the Microfilm Capital Investment Committee, it has been two years of insight into the opportunities and accumulation.

Original title Microfilm Capital Tang Xiaoming: Economic downturn? It's rising sun!

In 2014, Tang Xiaoming said in an interview: "Looking at the first ten years and the next ten years, the amount of money invested in VC and PE in the cultural and creative industries has reached a peak, and I even want to start a business myself." At that time, he was serving as executive director and member of the investment decision committee of the "VC giant"-China Cultural Industry Investment Fund. In 2015, he really resigned to start a business. This year, Microfilm Capital, which he is at the helm, has invested in more than 40 entertainment companies, and the fund size has rapidly grown from less than 100 million yuan to 4 billion yuan, ranking the first echelon of cultural industry funds. All this took less than two years.

What the public sees is the two years when Microfilm Capital has been speeding on the capital track and invincible. But for Tang Xiaoming, chairman of the Microfilm Capital Investment Committee, it has been two years of insight into the opportunities and accumulation.

Today, Yi Kuang led everyone closer to Tang Xiaoming to listen to the sharp insights of this pioneer of cultural industry capital.

The cultural industry needs to focus

on two points when selecting investment targets

: one is growth, and the other is people. Cultural enterprises rely far more on people than Internet companies. When judging people, we must look at their qualifications and background. In the cultural industry, the average age of successful entrepreneurs should be at least 5-8 years later than that of TMT (Internet Technology, Media and Communications), because it has higher comprehensive requirements on people. The cultural industry is not built by pure products, but more important is the understanding of social consumption psychology and the ability to control resource allocation. Therefore, when lithography invests, it attaches great importance to human factors. As long as the team is there, it will not affect the root cause of the enterprise. These are the two most fundamental core factors I can think of.

There are very few real big data companies

Tang Xiaoming: A big data company is a concept, not a business model. It should be a company with particularly excellent commercial cash delivery, and should have two major elements at the same time: one is in-depth and professional data, and the other is to hold users. In fact, there are very few real big data companies. The lithography era itself is a real big data company: after getting consumer-level data and users through ticketing, we can then achieve the third and second place in the field of film distribution based on the underlying big data of ticketing and the ability to hold users. Take the lead and then attack the content market, advertising market, and derivatives market.

Tang Xiaoming is not optimistic about the current mobile Internet transformation of the sports industry

: Microfilm Capital has invested in five or six projects in the sports industry, all of which are non-Internet models. They are all traditional venue operations and events. They can all make money and have financial health., rapid development. We also do IP and events, which will have explosive growth space. For example, we invested in Jingang Automobile to manage four or five car parks, and also to do the highest-end car events in China. After we finished investing, investment institutions increased prices to buy old stocks within two months. Recently, some investors may invest at double the price, which is what happened within half a year.

On the contrary, lithography Capital did not invest in projects such as matchmaking, ball booking, coaching, and gyms. At this stage of the sports industry, I am not optimistic about its Internet model. Because at this stage, the foundation of the entire sports industry is very weak and the asset bubble situation is relatively serious.

After the traditional industry has developed to a certain scale, it is relatively scattered, has no brand, and is not centralized. There is a lot of room for the Internet; but the industry is weak to a certain extent and basically has not started yet. It is too early to do the Internet, so this point needs to be defined in stages.

In fact, this kind of sports investment also represents our style, which is: go deep into the front line of the industry and find companies that are stable, growth-oriented.

What difficulties do Mercedes-Benz encounter in cross-border investment in cultural capital on international tracks

?

Tang Xiaoming: Whether you invest in YG Entertainment Company in South Korea or a company in the United States, there are no issues that require special consideration in terms of post-investment management of Microfilm Capital. Because if you pursue financial returns purely for financial investment and manage across borders, it will be more difficult. After all, there are cultural barriers and distance factors. Therefore, when we invest, we must have complete operating ideas and ideas on the use of domestic resources and market expansion of the investment target, and we will not say that we invest for the sake of investment. It is precisely because of this that even if there are some short-term policy fluctuations, it will not be a big problem for us.

Overall, lithography Capital did not encounter much difficulties in cross-border investment. If there is, it is exchange.

Mergers and acquisitions from overseas, Jin

Tang Xiaoming began to emerge from the waves: M & A integration is a very useful process of learning, communication, and absorption, but 70% of M & A integrations in the market fail, with fewer victories and more losses. In this process of survival of the fittest, those talents who truly integrate technology and creation will also be screened out, and the future hope of the industry lies in these people. For example, if Chinese technicians and American creators have conducted in-depth cooperation, exchanges, and collisions on projects, then when this group of people come out to do things again, it may be a better project.

Are there more bubbles in domestic cultural assets?

Tang Xiaoming: Regarding the recent so-called "low inside and high outside" argument in the market (that domestic cultural assets are being underestimated compared with foreign countries), my view is exactly the opposite. In fact, domestic asset projects are being overvalued. Some companies themselves do not have long-term, continuous capital value for securitization, but are also financing. Even the studios of directors and actors are capitalized to achieve high valuations. This is a completely bubble phenomenon.

However, foreign prices are relatively fair. Individual cases of overvaluation are not enough to reflect the overall market situation. Moreover, no matter how much money China has, only a few go out. The foreign cultural market is so large that it is not easy to push up prices. In addition, some domestic companies will make false accounts to achieve this valuation after failing to achieve the expected value. Foreign countries do not have to worry about these credit risk issues.

In the cultural industry-the next "investment outlet"

, investment opportunities in new technologies such as blockchain, AR, and VR will have to wait for

Tang Xiaoming: For new things that have just emerged, I am used to waiting and see. Because I personally have been in this industry for a long time, I am more sensitive to the concept of asset bubbles. I often don't read new things that are hotly sought after nowadays. I know blockchain is very popular, but my personal first reaction is not optimistic, including smart hardware such as AR and VR. I always wait until the first batch of concepts is over and come back to watch it. I personally feel that so far I have not missed great smart hardware companies or VR or AR companies, and the really good companies will come second behind.

Sports, ground entertainment, and new media will rise strongly

Tang Xiaoming: China's cultural industry is in a sunrise period, and the rotation of sectors has brought a large number of investment opportunities. Against the background of China's economic downturn, the cultural industry has naturally suffered a certain impact, but it is much smaller than other industries. We believe that sports and ground-based entertainment will be the focus of future investment. The consumption power of first-tier cities and many second-tier cities has slowly begun to increase. Therefore, participation in more expensive ground entertainment and sports should be boosted. After the rapid growth of movies comes to an end, the next wave is likely to be more expensive entertainment consumption. In these areas, we will focus on layout in advance. At the same time, we will reduce investment in the film and television industry, because the investment value of the film and television industry has been destroyed.

The second focus is new media under the mobile Internet model. Traditional media will be deconstructed, and big media brands will gradually disappear, replaced by new media brands that can directly penetrate user needs. In the future, new media must be tool + content. Pure tools will not work, and pure content will not work. Only when the two are combined well can the needs of users be effectively met.

China is about to usher in the era of "cultural industry integration + entrepreneurship"

Tang Xiaoming: Compared with the United States, the era of large-scale integration of our cultural industry in China has only just begun. The so-called Wanda Buy legend is just a prelude. In addition, China's mobile Internet media has surpassed that of the United States in terms of development, and China's mobile Internet service model also exceeds that of the United States. This has promoted the rise of a number of new mobile Internet media companies, with greater innovation capabilities and innovation space in this field than in mature markets in the United States.

The immature the industrial environment, the greater the space for new economic models and new mobile Internet models, and the more VC opportunities and entrepreneurial opportunities there are. From an investment perspective, China is a bigger bonanza than the United States, because it not only has opportunities for large-scale PE mergers and acquisitions, but also has many opportunities for early entrepreneurship, which is a feature of the China market.

Editor: Nancy